By Justine Xyrah Garcia, April 21, 2026; Business Mirror
A United Nations agency has trimmed its growth forecast for the Philippines this year, citing heightened global uncertainty amid the ongoing Middle East conflict.
In its Economic and Social Survey of Asia and the Pacific, the UN Economic and Social Commission for Asia and the Pacific (Escap) projected the Philippine economy to grow by 5.2 percent in 2026, significantly lower than its earlier 6.3 percent estimate.
Growth is expected to recover to 5.7 percent in 2027, while inflation is projected to average 2.5 percent over both years.
These projections assume the conflict remains short-lived and that tensions begin to ease later in 2026.
If realized, growth would fall at the lower end of the Marcos administration’s targets of 5 to 6 percent for 2026 and 5.5 to 6.5 percent for 2027.
According to the UN body, the Middle East tension could push up oil and freight costs, disrupt trade, and weaken global demand, fueling inflation and keeping interest rates elevated.
These pressures, in turn, could dampen exports, tourism and remittances, slow growth, and strain government finances as spending needs rise while revenues weaken.
“The disruptions to trading routes and shipments will lead to higher commodity prices, especially food and fertilizers in 2026. Introducing fiscal stimuli to support people and businesses would be challenging for many countries in the region as both fiscal deficits and public debt levels have risen in recent years,” the report stated.
For the Philippines, the Department of Economy, Planning, and Development (DepDev) earlier said the government could face a funding gap in supporting affected sectors if the conflict persists into the second half of the year.
DepDev Secretary Arsenio M. Balisacan told a Senate panel this month that funding requirements could reach around P429 billion for the second half, with sources yet to be identified.
Latest data from the Department of Budget and Management (DBM) showed that available resources from the 2025 and 2026 national budgets as the government’s response to the crisis is about P238 billion, P125.2 billion of which has already been released as of April 1.
Escap warned that risks to its outlook remain tilted to the downside, particularly if geopolitical tensions escalate further.
The extent of the impact, it said, will depend on countries’ reliance on Middle East oil and gas, exposure to trade and investment links with the region, dependence on remittances and tourism, and the resilience and structure of their economies.
For the Philippines, these vulnerabilities are pronounced, given its heavy dependence on imported fuel—about 98 percent of which is sourced from abroad, much of it from the Middle East—as well as its reliance on remittances, which accounted for 7.3 percent of gross domestic product (GDP) last year.
Across the region, Escap expects growth to moderate to 3.5 percent in 2026 and 3.8 percent in 2027 amid persistent global uncertainty.
It also flagged rising trade protectionism, particularly higher tariffs imposed by the United States, as an additional risk that could further dampen exports and disrupt global supply chains.
Beyond growth, the UN body warned that prolonged geopolitical tensions could undermine broader development outcomes across Asia and the Pacific, including rising food insecurity and worsening health conditions, increased poverty from weaker purchasing power and job losses, wider income inequality, and the displacement of migrant workers.
Escap stressed the need for proactive and well-calibrated economic policies to navigate heightened global uncertainty, urging governments to adopt targeted, “quick-win” measures that provide immediate support while safeguarding macroeconomic stability and protecting vulnerable sectors.
“Beyond macroeconomic stability, strengthening resilience requires diversifying export markets, deepening intraregional trade and expanding digitally delivered services, alongside boosting domestic and regional sources of demand,” it added.
